One of the most common tools used in evaluating the economic feasibility of a new enterprise or product is the break-even analysis. The break-even point is the point at which revenue is exactly equal to costs. At this point, no profit is made and no losses are incurred. The break-even point can be expressed in terms of unit sales or dollar sales. That is, the break-even units indicate the level of sales that are required to cover costs. Sales above that number result in profit and sales below that number result in a loss. The break-even sales indicates the dollars of gross sales required to break-even. It is important to realize that a company will not necessarily produce a product just because it is expected to breakeven. Many times, a certain level of profitability or return on investment is desired. If this objective cannot be reached, which may mean selling a substantial number of units above break-even, the product may not be produced. However, the break-even is an excellent tool to help quantify the level of production needed for a new business or a new product. Break-even analysis is based on two types of costs: fixed costs and variable costs. Fixed costs are overhead-type expenses that are constant and do not change as the level of output changes. Variable expenses are not constant and do change with the level of output. Because of this, variable expenses are often stated on a per unit basis. Once the break-even point is met, assuming no change in selling price, fixed and variable cost, a profit in the amount of the difference in the selling price and the variable costs will be recognized. One important aspect of break-even analysis is that it is normally not this simple. In many instances, the selling price, fixed costs or variable costs will not remain constant resulting in a change in the break-even.. And these changes...

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...The break-evenpoint for a product is the point where total revenue received equals the total costs associated with the sale of the product (TR=TC). [1]A break-evenpoint is typically calculated in order for businesses to determine if it would be profitable to sell a proposed product, as opposed to attempting to modify an existing product instead so it can be made lucrative. Break...

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BreakEvenAnalysis
A breakevenanalysis is a method used widely by businesses to assist them with finance. The breakevenanalysis shows a business when their amount of revenue is equal to their costs. This is known as the break-evenpoint. Although the breakevenanalysis shows...

...is the Breakeven. The Breakevenpoint is the point at which revenue is exactly equal to costs. At this point, no profit is made and no losses are incurred. The breakevenpoint can be expressed in terms of unit sales or dollar sales. That is, the breakeven units indicate the level of sales that are required to cover costs....

...﻿Breakevenanalysis is an important part in production management and decision making. In this assignment, the key elements of the break-evenanalysis will be discussed. The key elements of break-evenanalysis are fixed cost, variable cost, total revenue, break-evenpoint and margin of safety. Although...

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University of Phoenix
Accounting in Healthcare
ACC561
November 26, 2010
BreakEvenAnalysis
Relevance of DRG Analysis as a Tool in Healthcare
DRG analysis helps managers in health care determine levels of service at which to operate and to breakeven as well as avoid any loses. Using the DGR analysis,...